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Saturday, March 31, 2012

Two insurance companies under the umbrella of Guggenheim Partners--the Chicago based financial services firm of which CEO Mark Walter is the principal money behind the new ownership group of the Dodgers--contributed about 60% of the $2.15 billion purchase price, according to multiple sources familiar with the situation but not authorized to discuss it publicly.

The two companies are Security Benefit Life Insurance Company of Kansas and Guggenheim Life and Annuity Company of Indiana.

Both companies were mentioned in one of my recent blogs.

The reference in that case was to the fact that some major league owners were concerned about the structure of the Walter/Magic Johnson/Stan Kasten group and the industry being drawn into a relationship with a state or federally regulated company or companies, although there are wide-spread examples of such relationships in professional sports. The respective state insurance commissioners. Steve Robertson in Indiana and Sandy Praeger in Kansas, also had some concern about public money being used to help buy a baseball team, according to the sources.

Obviously, the group sailed through baseball's vetting process and it's record bid derailed the anticipated auction and left the two other bidders with no chance at a counter offer. Now, of course, owners are salivating at the thought of how $2.15 billion may enhance their own franchise value.

Similarly, Guggenheim's reputation and relationships with the insurance departments in the respective states (not to mention $125 billion in assets) eased any concerns that public money would be at risk, according to the sources.

The bid by the newly minted Guggenheim Baseball Partners was 30% higher than any other bid, and the winning group is obviously counting on a potentially massive new television deal, a rejuvinated fan base, potential development in parking lot partnership with (ugh) Frank McCourt and new marketing and merchandising concepts created by longtime Hollywood executive and Mandalay Entertainment CEO Peter Guber.

The latter and Johnson have been longtime friends and business partners, and it would not be a surprise to see marketing and merchandising concepts built around Magic as well as Matt Kemp.

The new ownership's possible sweep of internal changes and what it can do to have an immediate impact on the field isn't clear. but you don't pay $2.15 billion without intending to improve the product and the environment.

In the long-term, however, fans will have to help pay for it in one way or another, whether it's in the form of increased cable, ticket, concession and/or parking costs.

In a question and answer story with Bill Shaikin of the L.A. Times on the night McCourt jumped at their bid and canceled the auction, Kasten and Magic said they had no plans to lower parking or beer prices in a gesture to fans who had grown dispirited under McCourt's ownership (as new Angel owner Arte Moreno had lowered beer prices). Reading their negative reply one had to wonder "why not?".

In Kansas and Indiana, meantime, a long way from Dodger Stadium, any increase in premiums may have people simply asking "why?".

Thursday, March 29, 2012

I'm not talking about the Dodger sale, although there are things about that convoluted process I don't get but first I figure it will take me a full week to work my way through Thursday's rhapsodic coverage in the L.A. Times regarding Earvin (Magic) Johnson and his purchase.

What I don't get is baseball opening another season in the middle of the night.

In fact, you may not even be aware of this--especially if you live in L.A., which may be the first city to hold a parade in tribute to an ownership change--but the 2012 baseball season has already begun.

The Seattle Mariners have a 1-1 record, and the Oakland A's have a 1-1 record.

Clearly, Albert Pujols has his work cut out if the Angels are going to catch up.

Opening day used to be a special occasion in baseball. For many years and decades there would be a day game in Cincinnati. Schools would be out. People would gather around their radio, and later their television. In Washington, the President would often throw out the first ball (now, of course, even the 25th player is paid more than the President).

It's supposed to be the National Pastime, you know.

Now MLB seems to take special delight in opening in Japan.

The two games between the A's and Mariners started at 3 in the morning if you live on the West Coast, which is home to both teams.

I understand's baseball's increasingly global reach and the marketing and merchandising rewards that accompany it. I understand that participating teams and players earn a bonus for putting up with the jet lag and that the expenses are covered by MLB and Japanese interests.

What has all of that got to do with turning the opening of the season into just another day that draws little or no attention except from the most insomniac of seamheads?

Too bad. There were some things worth noting in these two games.

The Mariners won the first, 3-1, with King Felix Hernandez in mid-season form (he allowed one run and five hits in eight innings) and one of baseball's best young players, Dustin Ackley, getting a home run and game-winning hit. (Ichiro Suzuki, thrilling the capacity crowd, got the first four of his usual 200 hits, but then Ichiro can get four hits in a game on any continent).

In Oakland's 4-1 win in the second game, coveted Cuban defector, Yoenis Cespedes, hit his first major league home run, and Bartolo Colon--at 38, 10 years older than any A's teammate--threw eight strong innings for the win.

I called Rob Manfred, baseball's Executive Vice President, Labor Relations and Human Resources, on Thursday to ask why his industry continues to hold its opening series without the panoply that U.S. fans normally associate with an opener and, in fact, without the majority of U.S. fans even being aware the season was opening.

"We realize that the symbolism of opening day is important to all of our fans," Manfred said. "But from a strategic standpoint we are commited to the continuing expansion of baseball and our international revenue streams, and the only time we can get teams to Japan and back is for opening day."

The A's, having already played games that count, now return to California for four exhibition games against their Sacramento farm club and the San Francisco Giants. The poor Mariners, having already played games that count and a team that annually chalks up more air miles than any other, now must return to Arizona for five exhibitions before they and the A's reopen the season in Oakland on April 6. The Mariners then go to Texas for a three game series before finally opening at home on April 13.

Strategic commitment is obviously important to MLB, but the symbolism of opening day once was as well.

Wednesday, March 28, 2012

Having spent a half century in major league baseball press boxes, I have developed a considerable amount of cynicism and skepticism.

And the vision of Frank McCourt and his broker conducting an auction that wasn't an auction merely has underscored those traits.

I am not saying that the whole process of selling the Dodgers through a convoluted bankruptcy process was a set up to see that a group fronted by Los Angeles icon Magic Johnson ended up with the team.

There were probably too many hurdles in the form of the bankruptcy court and MLB requirements to be sure that, from the start, anyone could be positive they could make that happen.

Make no mistake, however: the events of the processes' final hours blindsided the other two bidders and literally left them without a chance to counter the $2 billion bid by the group fronted by Johnson, former baseball executive Stan Kasten and their principal money man, Mark Walter, of Chicago based Guggenheim Partners, a financial services company.

Left wondering what hit them, according to three people familiar with the situation but not authorized to discuss it publicly, were St. Louis Rams owner Stan Kasten and a group led by hedge fund billionaire Steven Cohen and biotech billionaire Patrick Soon-Shiong, reputed to be the richest man in Los Angeles.

The fact that Soon-Shiiong was on the outside looking in Wednesday had to be particularly disturbing to Soon-Shiong considering he had been romanced, from the start, by all of the bidders and finally--despite a close relationship with Magic--became convinced that by joining Cohen he had the best shot at being part of the winner.

If Soon-Shiong has been left a little cynical and skeptical himself, he is welcome to apply for a card in the Baseball Writers Assn. of America.

As card holder No. 3, which speaks to my numbing 50-plus years in the organization, this is my understanding of what happened during the final 48 hours, according to the three people familiar with the situation.

First of all, major league owners met by conference call Tuesday afternoon, approved the three groups still bidding for the Dodgers and were informed by the federal mediator, Joseph Farnan, that an auction would be held in the offices of McCourt's New York law firm, Dewey Lebouf, on Wednesday.

Final bids and negotiations would be conducted at that time.

Yet, although not all members of the two groups competing with the Magic group had reached New York, the Dodgers announced they had reached a $2 billion sales agreement with the Magic group and even had reached a $150 million agreement with McCourt on the parking lot, giving Magic's group control when games are played and providing for the possibility of joint development. This is not the type agreement that could have been done in a matter of minutes.

The explanation from McCourt's broker, Blackstone Advisory Partners, according to the three people who provided an insight into the situation, is that they were not legally obligated to conduct an auction, that, for all intents and purposes, they had been conducting an auction since the process started months ago, that the three groups had been informed Monday night to prepare final bids and that the previous bids by Cohen and Kronke were so far below the Guggenheim bid that there was no sense in presenting the chance for a counter offer.

Thus, the Wednesday auction was over Tuesday night, with the Dodgers having a news release ready almost immediately.

This writer contacted members of the Cohen and Kronke groups Wednesday but all said they were still bound by provisions of the confidentiality agreement and refused to talk about the final process.

None of this probably matters to dispirited Dodger fans celebrating on Wednesday that the Dodgers will now be under the partial direction of the charismatic Johnson and that McCourt's tumultuous tenure is almost over, with the bankruptcy court still to approve the terms and final details to be completed by April 30, when McCourt must deliver a $131 million divorce settlement to Jamie McCourt.

Kasten, the former president of the Atlanta Braves and Washington Nationals, will be president of the Dodger entity that will become Guggenheim Baseball Partners. It is not clear what will happen to general manager Ned Colletti or any of the other Dodger executives. It is presumed that Walter, given his record $2.15 million investment, is prepared to pump more money into the organization, improving the team and renovating the stadium, although neither of those important steps can be accomplished over night.

He is banking, of course, on a potentially record TV deal with Fox Sports or Tiime-Warner Cable, with the Dodgers possibly at the heart of a very lucrative regional network.

Given how McCourt took a flagship franchise and ran it into mediocrity and bankruptcy, turning it over to a group headed by Magic and Kasten has to be a good thing, and McCourt probably was banking on his own damaged image gaining a measure of improvement by the development, which was on his mind when he met with community leaders over the last few weeks and came away convinced that Magic would have a positive impact on the organization and his own desire to stay in the city.

In the end, I can not say for sure that the process was designed all along to get the club to Magic, but the other two final bidders must be wondering what hit them.

Tuesday, March 27, 2012

The auction sale of the Dodgers, scheduled for the offices of Frank McCourt's New York law firm Wednesday, ended almost before it began Tuesday night.

The Dodgers announced that a group led by Magic Johnson and former baseball executive Stan Kasten has been selected as the team's next owner. A person familiar with the process but not authorized to talk about it implied that the Johnson group blew out the competition with a bid of $2 billion.

It is not clear what the two other competing groups bid or even if they had a chance to make a bid. One of those groups was led by hedge fund billionaire Steven Cohen and biotech billionaire Patrick Soon-Shiong, reputed to be the richest man in Los Angeles, while the other bidder was St. Louis Rams owner Stan Kronke.

The sale must be confirmed by the federal bankruptccy court in a hearing April 13 and must close by April 30, when McCourt owes Jamie McCourt a divorce settlement of $131 million.

The $2 billion sale price would easily cover McCourt's debts and set a record for the sale of a North American sports franchise. The previous record was set in 2009 when the Miami Dophins sold for $1.1 billion.

The Dodgers will now be owned by an entity called Guggenheim Baseball Partners and run by Kasten, the former president of the Atlanta Braves and Washington Nationals and a close friend of Commissioner Bud Selig.

Mark Walter, CEO of Guggenheim Partners, a Chicago based financial services firm, participated in the auction and meetings with major league owners, according to the person cited above, and his firm is the principal money behind the deal. However, he is not expected to play a role in the Dodgers' daily operations.

The sale marks the end of one of the tumultuous chapters in Dodger history in which one of the sport's flagship franchises was driven into mediocrity and bankruptcy by McCourt and it will undoubtedly be greeted by widespread approval from the club's disspirited fan base, cheering the departure of McCourt and take over by Johnson, the Lakers legend whose championship background and community involvement have made him one of the most popular figures in Los Angeles history.

Whether Johnson's popularity was a factor in the decision by McCourt, striving to resurrect his Los Angeles image, or it was based strictly on the whopping sales price isn't known, but it is known that he has spent considerable time talking to city leaders in regard to Johnson and came away aware that the heart of the city was rooting for Magic.

However, now that Magic has the Dodgers, the process of restoring the club's magic shouldn't be thought of as an overnight proposition.

Major League Baseball owners, in a conference call vote Tuesday, approved the three remaining bidders for the Dodgers, turning the process over to club owner Frank McCourt and his broker, Blackstone Advisory Partners, for a closed door auction in New York Wednesday. The price could go to $1.5 billion or higher, which would set a record for a North American sports franchise. The Miami Dolphins were sold for $1.1 billion in 2009, the current record.

The three remaining bidders are a group led by billionaires Steven Cohen and Patrick Soon-Shiong, a group fronted by Magic Johnson and former baseball executive Stan Kasten, and St. Louis Rams owner Stan Kronke. Those three, in earlier bidding, were between $1.3 billion and $1.6 billion, but it is believed that none of the three have showed their final hand yet, and the final price could depend on whether McCourt retains control of the Dodger Stadium parking lot or includes it in the auction sale.

It is uncertain how long the auction will last. A winner could be determined today or later this week.
The auction is strictly in the hands of McCourt and Blackstone. Major League Baseball can only usurp his choice if he incurs considerable new debt during the auction. McCourt, highly leveraged, bought the Dodgers for $421 million in 2004. He owes creditors more than $700 million, and he must complete the sales negotiations by April 30, when he owes Jamie McCourt a divorce settlement of $131 million.

Monday, March 26, 2012

Major league baseball owners will meet by conference call Tuesday to vote on the three surviving bidders in the bunkruptcy auction of the Dodgers. All of the bidders are expected to be approved, although some owners have concern about the financial structure of the group fronted by Magic Johnson and former baseball executive Stan Kasten.

The call will be made amid a new memo from the federal bankruptcy court, concerned about the amount of information being leaked on various aspects of the process, that underscores the court's initial order for everyone involved to refrain from discussing it publicly or face a contempt of court charge.

The Johnson/Kasten group, which has produced concern among some owners because more than 50% of its principal financing is coming from state regulated insurance companies in Kansas and Indiana under the framework of a structure produced by their partner, Mark Walter, CEO of Guggenheim Partners, has cleared the vetting process by two ownership groups and is exected to receive the 23 of 30 votes that are required Tuesday to move on.

Also expected to move on are St. Louis Rams owner Stan Kronke and a group headed by billionaires Steven Cohen and Patrick Soon-Shiong.

The end to this convoluted and contentious process is in sight.

The bidders surviving Tuesday's vote can begin final negotiations with owner Frank McCourt and his broker, Blackstone Advisory Partners, in New York Wednesday.

McCourt has been hopeful of selling for $1.5 billion or more, but if he insists on retaining control of the Dodger Stadium parking lot the price could be less--or barely enough to compensate his creditors.

He is required to complete sale negotiations by April 30, when he must pay Jamie McCourt the $131 million she is owed in their divorce settlement, but he could pick the winner by the end of this week.

Sunday, March 25, 2012

As reported exclusively by this blog several days ago, concern among major league owners over the financial structure of the Magic Johnson/Stan Kasten bid for the Dodgers has quietly been spreading, according to two people familiar with the situation but not authorized to discuss it. Now, as well, the involved financing by insurance companies in Kansas and Indiana may have state regulators concerned.

With major league owners expected to vote by conference call on the three remaining bidders in the bankruptcy auction of the Dodgers this week (perhaps as early as Tuesday), it remains unclear as to weather regulators in the two states could find problems with the involvement of the companies--the Security Benefit Life Insurance Company of Kansas and the Guggenheim Life and Annuity Company of Indiana--or that the bid could be sidetracked completely by big league owners.

The principal financer behind Johnson and Kasten is Mark Walter, CEO of Guggenheim Partners, a private global financial services firm with $125 billion in assets under managment, according to the firm's fact sheet.

The concern among some owners, according to the two people familar with the situation, is based on whether the industry should be involved with state and/or federally regulated companies. Similarly, state concern has been developing over whether public money should be risked in the possible purchase of a baseball team, even though Forbes has estimated the value of the Dodgers at $1.4 billion and the new owners are counting on a multi-million dollar television contract from Fox Sports or Time-Warner and the possible structuring of a regional network built around the Dodgers.

According to the two people familiar with the situation, Indiana Insurance Commissioner Steve Robertson was not aware or had not been informed that the Guggenheim Life and Annuity Company was being used to help finance the Dodgers purchase and may pursue an investigation starting Monday. Messages left for Robertson on Sunday were not returned as of mid-day.

The hedge fund company of a competing bidder, Steven Cohen's SAC Capital Advisors, is subject to federal regulations. In fact, two employees have been charged with insider trading, although Cohen has cooperated with investigators and been cleared of any potential personal problems.

In addition, the proposed structure of the Cohen bid, according to the two sources, is basically based on personal financing, including a large measure of cash. The Cohen group has also been enhanced by the addition of Dr. Patrick Soon-Shiong, reputed to be the richest man in Los Angeles. Forbes has estimated the combined personal wealth of Cohen and Soon-Shiong at $15.5 billion.

Also still alive in the bidding is St. Louis Rams owner Stan Kronke. The vote by owners could approve one, two or all three groups. The survivor or survivors would then begin final bidding and negotiations with Dodger owner Frank McCourt and his broker, Blackstone Advisory Partners.

Friday, March 23, 2012

In the convoluted and now increasingly contentious bankruptcy auction of the Dodgers, three groups remain in the bidding.

With tensions between Major League Baseball and Frank McCourt's broker, Blackstone Advisory Partners, at a point where court appointed mediator Joseph Farnan seized control of the process as MLB filed technical legal drafts against Blackstone and the club's reorganization plan, two of the groups were eliminated according to a person familiar with the situation but not authorized to talk about it.

The two groups eliminated were the partnership of Michael Heisley, owner of the Memphis Grizzlies, and Tony Ressler, co-founder of Los Angeles based Ares Management, and Stalney Gold, CEO of Shamrock Holdings, the investment arm of the late Roy E. Disney's family.

The three still in the bidding are a group headed by hedge fund billionaire Steven Cohen and Dr. Patrick Soon-Shiong; a group fronted by Magic Johnson and former baseball executive Stan Kasten, and St. Louis Rams owner Stan Kronke.

As reported by this blog yesterday, some major league owners remain concerned about the financial structure of the Johnson-Kasten group, the person familiar with the situation confirmed, but whether the concern is serious enough and widespread enough to sidetrack the group's bid is uncertain.

At this point, the financial strength of the Cohen/Soon-Shiong group (the combined net worth of the two principals, according to Forbes, is $15.5 billion), would seem to make them the favorite, but little in this process is a certainty.

The 30 major league owners may meet by conference call as early as Tuesday to vote on the three finalists. One, two or all three could be approved to begin final bidding and negotiations with McCourt and Blackstone. Forbes estimated the value of the Dodgers at $1.4 billion last week, and the final price could eclipse that, even if McCourt remains firm on retaining ownership of the parking lot, a separate entity from the team and stadium.

Thursday, March 22, 2012

Major league baseball owners will meet by conference call next week to vote on the five groups still bidding for the Dodgers, with the survivors turned over to club owner Frank McCourt for final bids and the selection of a winner by April 8, when McCourt must be back in U.S. Bankruptcy Court.

Meanwhile, a measure of concern has developed among owners about the financial structure of the group fronted by Magic Johnson and former baseball executive Stan Kasten, according to two people familiar with the situation but not authorized to talk about it.

As portrayed by the two people, neither Johnson nor Kasten have much personal equity involved, and the principal financing is coming from insurance companies under the direction of Guggenheim Partners, whose CEO, Mark Walter, is a partner of Johnson and Kasten. Insurance companies are federally regulated, and one of the two people revealing this situation said: "The owners are not sure they should be in business with an operation that involves federal regulation."

How widespread this thinking is among the owners and the exact breakdown of the group's financing wasn't revealed by either of the two people reporting the situation to this writer. Guggenheim is a private global financial services firm with $125 billion in assets under management, according to the firm's fact sheet. In addition, the Johnson group was the highest bidder at $1.6 billion when the second round of bidding was completed several weeks ago, with the other four of the currently surviving bidders at either $1.4 billion or $1.3 billion.

Since then, while this concern was apparently developing among some owners regarding the Johnson group's financing after vetting by MLB's ownership committee and Executive Council, a competing group's financial situation has been considerably enhanced.

As reported recently, Dr. Patrick Soon-Shiong, reputed to be the richest man in Los Angeles, has joined the group led by hedge fund billionaire Steven Cohen. Shiong's net worth has been estimated at $7.2 billion by Forbes, while Cohen's has been estimated at $8.3 billion.

Soon-Shiong has been lingering in the shadows of the Dodger bidding since the process began while being romanced by several of the groups.

"Soon-Shiong," said one of the two people mentioned above, "was not going to commit until he was confident he was joining the group with the best chance of winning."

Between Cohen and Soon-Shiong alone the two have a net worth of $15.5 billion. The group also includes longtime Los Angeles based player agent Arn Tellem, who would become the club president, and former deputy commissioner Steve Greenberg.

Tuesday, March 20, 2012

SURPRISE, Ariz.--In the shadow of Albert Pujols, amid the never ending saga of the Dodger sale, there is this foundation to the multi-million dollar hopes of the Angels:

"I think where these guys are in their careers and the talent they have right now, there is no doubt but that our expectations are that this will be the best rotation we've had."

That was Manager Mike Scioscia on a bright, cool morning as the Angels prepared to play the Kansas City Royals. He was talking, of course, about Jered Weaver, Dan Haren, Ervin Santana and C.J. Wilson, the front four of a rotation that still has a vacancy at No. 5 and will not be needed until April 15.

"We've had some very good pitchers here---Bartolo Colon, Kelvim Escobar, John Lackey, Jarrod Washburn among them," Scioscia continued, "but perhaps never a group of this caliber at the top of their careers."

Wins and losses for any pitcher are a matter of variables---good defense, productive offense and the right pitch at the right time.

Given Scioscia's 12 years of success at the helm of the Angels and the respect he carried during almost 10 years as the Dodgers bulwark catcher, there is a surprising fact that could change for him this year.

Only once--as the Dodger catcher in 1985--has Scioscia worked with a rotation that had four starters win 10 or more games; double figures in other words.

That was 1985, when Orel Hershiser won 19, Fernando Valenzuela 17, Bob Welch and Jerry Reuss 14 each. It never happened again while with the Dodgers and it has not happened as the Angel manager, even when the club won the World Series as a wild card: That 2002 rotation was led by Washburn and Ramon Ortiz, winning 15 each, and Kevin Appier at 14. Lackey, a rookie, did not emerge until later in the season, as did the rookie closer, Frankie Rodriguez.

"It's just tough for any pitcher to control wins and losses," Scioscia said. "All you can do it make the pitches. So much depends on the support of the team. Last year we played terrific defense, and we expect that to continue. We didn't produce the same kind of offensive support, but we expect that to change in a big way this year."

That expectation starts with Pujols in the No. 3 spot in the batting order and the possibility that Kendrys Morales will finally be ready to provide a left handed power bat behind him.

Morales makes his first exhibition start on Thursday, possibly the most watched and important moment of the Angel spring.

Meanwhile, the Angel rotation could be baseball's deepest and best.

"We have four guys in our rotation who could be a No. 1 on any team you want to name," Scioscia said, "but I'm not as concerned with how many wins they have besides their names but how many wins we have, period.

"I feel confident they will take us deep into games, and that is a major plus. Adding Wilson gives us left handed balance, and a fourth guy who is a true professional."

For Scioscia it could be a first since 1985.

Getting back to first place in a division won by the Texas Rangers the last two years is the bigger hope as exemplified by the contracts owner Arte Moreno gave Pujols and Wilson, among others. It was the owner's version of his own big pitch.

X X X

It was expected that the 30 major league owners would vote on the five groups bidding for the Dodgers this week, but a person familiar with the process but not authorized to discuss it said Tuesday that it might not happen until early next week. The survivors of that vote will be turned over to Dodger owner Frank McCourt for final bids and negotiations. McCourt has to make a decision by April 8, when he is required to be back in U.S. Bankruptcy Court.

Sunday, March 18, 2012

The bid by Connecticut based hedge fund billionaire Steven Cohen to buy the Dodgers has been enhanced by more billions.

Patrick Soon-Shiong, generally ranked as the richest man in Los Angeles, has joined the Cohen group. The development was first reported by Bill Shaikin on the L.A. Times web site Sunday afternoon and confirmed by this writer in e-mails from two people familiar with the sales process but not authorized to discuss it.

Soon-Shiong, 60, has been lingering in the background of the Dodger sale since the process began, and was rumored by people close to the situation to be leaning toward joining the group fronted by Magic Johnson and former baseball executive Stan Kasten.

It couldn't be ascertained what influenced Soon-Shiong, a doctor, biotech investor and respected community philanthropist, to join the Cohen group or what percentage he will own and/or what role he will play.

Forbes has estimated his net worth at $7.2 billion while estimating Cohen's at $8.3 billion. Cohen is known to have submitted a bid of $1.4 billion with $900 billion in cash, but is believed ready to make a final bid of close to $2 billion if necessary--without the need for financing.

The addition of Soon-Shiong gives the group two primary investors with an estimated net worth of $15.5 billion. Soon-Shiong also enhances the Cohen group's ties to Los Angeles, with long-time Los Angeles based attorney and player agent Arn Tellem expected to be the club president if the group prevails.

Saturday, March 17, 2012

I reported in my last blog, posted Thursday afternoon, that the Dodger sale process had reached a point where it was changing hourly and remained quite fluid.

I should have used a stronger word than fluid.

I should have pointed out again that the agreement between Dodger owner Frank McCourt and Major League Baseball did away with the concept of "one day you're in and one day you're out."

The agreement is such that the bidders--almost from the start of a convoluted process--have always had another door on which to knock.

Take the last 10 days or so for example.

Seven groups or individuals began meetings with baseball's ownership committee and executive council in a continuation of the vetting process by baseball--background checks, financing and how each group planned to organize its operation, among other things.

Ultimately four groups survived, moving on to the next step, while three individuals were rejected.

They were Alan Casden, a Beverly Hills real estate developer; Stanley Gold, who supervises Shamrock Holdings, the firm that handles investments for the family of the late Roy Disney (Gold and the family being partners in the Dodger bid), and the partnership of Leo Hindery, former head of the YES network, and Tom Barrack, chairman of Colony Capital in Santa Monica.

The three were out-- but not quite.

The agreement between McCourt and baseball provides that any rejected bid group can appeal to a court appointed mediator.

The mediator is Joseph Farnan, overseeing the sale of the Dodgers for the U.S. Bankruptcy Court.

Casden initially issued a statement that he would not appeal, but he then did and was rejected again. Gold and Hindery/Barrack will appeal to Farnan on Monday.

Whether they are approved or rejected again, the 30 major league owners will vote on all of the surviving groups Thursday or Friday--approving all, none or some, with final bids going to McCourt the following week. McCourt is then expected to pick the winner on or about April 1.

Thursday, March 15, 2012

Having finally reached the date on which final bids are due Friday in the bankruptcy auction of the Dodgers, the nauseating fact is that Frank McCourt seems certain to receive the predicted $1.5 billion or more while also, perhaps, retaining control of the Dodger Stadium parking lot.

McCourt, in fact, could double the baseball record of $845 million that Tom Ricketts and family paid for the Chicago Cubs in 2009.

Of course, McCourt must pay off a debt of about $750 million, owes Jamie McCourt $131 million in their divorce settlement and could be hit with another major legal blow from the suit that Bryan Stow, the San Francisco Giants fan who suffered life changing injuries when beat up in the Stadium parking lot, has filed against him.

Yet, McCourt should emerge with enough to maintain his West Coast lifestyle. I mean, while most of us have houses that are under water, Frank and Jamie still have those Malibu estates overlooking the water--not to mention a few other scattered properties in zip codes available only by buying a map to the stars' homes.

At some point, McCourt should send a thank you note to Commissioner Bud Selig who allowed him to buy the Dodgers on leverage because the Fox Group was so anxious to dump the team--and we know that Fox underwrites much of baseball--and now Selig was so anxious to get rid of McCourt that a good portion of baseball's sales agreement with the Dodger owner is favorable to him.

Although the situation is fluid, changing hourly, this is how it stood Thursday afternoon, according to conversations with several people close to the process but not autorized to discuss it or restricted by the confidentiality agreement with Blackstone Advisory Partners, broking the sale for McCourt.

Baseball's vetting procedure has reduced the bidding field to four groups or individuals.

The four include the groups fronted by Magic Johnson and hedge fund billionaire Steven Cohen, a parternership between Memphis Grizzlies owner Michael Heisley and Ares Capital co founder Tony Ressler (who is a minority owner of the Milwaukee Brewers), and St. Louis Rams owner Stan Kronke.

As of Thursday afternoon, according to figures first reported by Forbes and confirmed by this writer, the Johnson-Stan Kasten group was the highest bidder at $1.6 billion.

Cohen, who has interest in Tony LaRusaa to head his baseball operation, according to Bill Shaikin in the L.A. Times, had bid $1.4 billion, including $900 billion in cash (undoubtedly attractive to McCourt), while Kronke and the Heisley/Ressler parternship were in the $1.3 billion area.

There could be considerable movement before the Friday deadline, some of it, perhaps, based on whether McCourt remains firm on controlling the parking lot.

Clearly, the Dodgers are a flagship franchise that has been marred in the community by McCourt's mismanagment. The bidders, by going to potentially record levels, obviously believe the situation can be turned around in a hurry, particularly given the impetus of a new television deal, re-energized fans and renovations modernizing the stadium.

Baseball's 30 owners will vote on the remaining bidders by conference call next week, with the survivors turned over to McCourt, who must decide on the winner by April 1 and complete a sales agreement by April 30. He is about to have his decimated bank account--it was never of big league standards to start with--considerably enhanced. Anyone have an antacid?

Tuesday, March 13, 2012

The question I have been thinking about--in addition to wondering how Ann Romney decides which of her two Cadillacs to drive to the market?--is this:

With final bids in the bankruptcy auction of the Dodgers due Friday, and the 30 owners expected to vote (probably by conference call next week) on the four or five groups (if that many) surviving the vetting process, will Frank McCourt feel compelled--out of real and/or perceived--community pressure to select the group fronted by the popular Magic Johnson?

"That is THE question," said a member of another group who who can not be identified because he signed a confidentiality agreement with Blackstone Advisory Partners, brokering the sale for McCourt.

"We are aware that McCourt has spoken to a lot of people in the community to try and get a gauge on what the reaction will be if he doesn't pick Magic--you know, 'will (people) hate me that much more?'"

It is difficult to believe that the generally despised McCourt would receive anything but a standing ovation no matter who he chooses to replace him in the owner's office.

However, Magic's name is undoubtedly the most famous and familiar among the bidders.

There are six groups or individuals remaining as meetings with baseball's ownership committee and executive council continue in Arizona.

Alan Casden, a Beverly Hills real estate developer, was not invited to Monday's meeting between some of the bidding representatives and the two Major League Baseball committees.

In a process that has not always been clear and definitive, Casden's rejection--if that is what it was and is what it appears to be--can be appealed by McCourt to a court-appointed mediator.

However, a major league official not authorized to speak on the subject said he expected that other bidders would be eliminated by the time the full ownership votes and sends the survivors on to McCourt for his final decision by April 1.

After that he must work out a sales agreement by April 30, when he is court authorized to pay a divorce settlement of $131 million to Jamie McCourt.

--And the Magic group, which includes former baseball executive Stan Kasten and their main financial backer, Mark Walter, who is chief executive of Guggenheim Partners.

In addition to Magic's popularity, which apparently is weighing on McCourt, Kasten gives the group added impetus.

"We know he was initially going to be the commissioner's emissary when Bud Selig initially took over the Dodgers but he then put together his own group," said the member of the competing group quoted above.

Whether that formulation was all Kasten's doing or Selig had a hand in it, as he once put together the group that won the Boston Red Sox auction, is not clear.

Ultimately, continued the member of the competing group, "the money has to be right for McCourt to pay off his creditors, pay off Jamie and continue living the lifestyle he is now accustomed to. He has been holding tight (to the concept of maintaining control of the parking lot) and that drives down the sales price. He has to decide, given his debts, if taking less for the team to continue owning the lot makes sense."

Does money talk, or is it all Magic? That also seems to be a big part of it.

Sunday, March 4, 2012

Baseball's decision to expand the playoffs by adding a second wild card team in each league follows several years of lobbying in favor it by the general managers at their annual November meeting.

The concept makes sense and does not put baseball in the same category as the NBA and NHL, where 16, or more than half of the 30 teams, qualify for the playoffs. Ten of baseball's 30 teams will now qualifify and there will be more emphasis on winning the division.

Baseball would be wise to make its next major format change in 2013, when the Houston Astros move to the American League West, putting 15 teams in each league and basically requiring an inter-league game every night. It is either time do away with the designated hitter in the American League, a step the players union will vehemently oppose since the DH position is frequently one of baseball's highest paid, or vote to have the National League accept it, another large obstacle because there is no movement in favor of it among NL owners.

On the subject of the expanded playoffs, baseball's general managers accept the increased parity that has marked the playoffs since increased revenue sharing among the clubs and markedly improved revenue from regional networks and the central fund have enhanced the buying and developmental power of virtually every team which has used the money for what it is intended--improved rosters and competitiveness.

However, under the previous format, where one wild card team in each league moved directly into the playoffs, in many situations there was no distinct advantage in winning the division. In 2010 for example, the New York Yankees clinched a wild card spot and then rested their best pitchers for the playoffs rather than challenge for the division title.

Now there will be a one game play-in between the two wild card teams in each league, with those teams presumably having to use one of their best pitchers to qualify for the division series while the three division winners in each league rest their best pitchers before starting the best of five division series against the second or third best pitcher on the winning wild card team.

The one game play-in between the wild card teams should add excitement to the overall playoffs, and the second wild card team in each league should add credibility to the 162 game race, providing teams with more incentive to win their division.

X X X

AND THE DODGERS?

The process of vetting the leading financial figure in each of the bidding groups by baseball's ownership committee and executive council is expected to continue through this week, with the surviving groups possibly being turned over to Frank McCourt and Blackstone Advisory Partners by the end of the week for final bids

. As reported here several weeks ago, it is believed that only three or four of the remaining groups have the type equity that it will take to buy the club for, perhaps, $1.5 billion and then renovate the stadium and parking lot. While McCourt has said that he plans to keep the lot, it is doubtful that any group would complete a deal with McCourt without the lot being included. Said a member of one group who refused to be identified becase of his confidentiality argreement with Blackstone: "It's vital that you have control of the lot because there are things that need to be done for the protection of the fans. McCourt is only interested in the money."

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About Me

Ross Newhan has covered baseball in Southern California for over 50 years. He was the first national baseball columnist at the Los Angeles Times, and has written several baseball books. He was elected to the writer's wing of the baseball Hall of Fame in Cooperstown in 2000. His son David Newhan is a graduate of Pepperdine University, has played parts of eight seasons in the major leagues and lives in San Diego County with his wife and two children. David currently is coaching with the Padres Lake Elsinore Storm. Newhan's daughter Sara is a Special Ed teacher. Newhan and wife live in Southern California where the Angels, Dodgers and Padres are all an easy drive.